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Ed's Blog

As the year 2018 came to an end, U.S. PIRG, Americans for Financial Reform and AFR members filed the last in in a seemingly interminable series of Consumer Financial Protection Bureau Requests for Information (all our previous comments in the series). Although there was no clear intent or goal to this murkily-drafted "Data Collections" RFI, we, and allied academic scholars who filed a separate comment (all previous academic scholar comments in the series) both inferred it as yet another opportunity for industry opponents of the CFPB to attack the Bureau's consumer protection mission -- this time by challenging its collection, use and reuse of data to evaluate and respond to financial marketplace problems that harm consumers. Yet, the RFI was accompanied by a 199-page report which documented the opposite -- that the CFPB's Data Governance framework works well to ensure the CFPB's proper use and protection of data, to include protecting the data security (privacy) of consumers and companies.

Throughout the November 2017-December 2018 reign of OMB chief Mick Mulvaney as acting director of the CFPB, the Bureau had -- on a sometimes bi-weekly basis -- issued requests for information on key elements of the CFPB's internal workings, from how it writes regulations to how it handles consumer complaints to how it enforces the law. In a previous joint letter from AFR members, cited in our December comment, we had pointed out the following:

“The questions posed in the Requests for Information are slanted towards a weakening of the Bureau’s role in protecting consumers. Few, if any, requests are about where or how the Bureau should take stronger action against financial industry abuses.
[...]
“Moreover, the RFIs pose questions that are almost entirely from an industry perspective and are insufficiently specific to elicit meaningful comment. The RFIs hint at changes desired by industry without providing enough detail to inform members of the public who do not have experience with the internal workings of the Bureau or the implications of the questions. This process weighted in industry’s favor is not consistent with the CFPB mandate to focus on consumer protection."

Basically, the RFIs represented softballs lobbed to industry trade associations, with their endless benches of lawyers and analysts ready to come to bat to raise complaints and questions about the CFPB.

The core finding of our comment was this:

"Our groups believe that to protect consumers in financial markets, data collection and evaluation play a critical role that must continue. We do not believe there is any reason for the Bureau to stop collecting information nor to restrict its reuse among the various offices and divisions of the Bureau. On the contrary, either action would make it harder for the Bureau to accomplish its main functions and underlying mission."

Were the CFPB to adopt some of the odder outcomes apparently sought by this RFI, different divisions of the Consumer Bureau would not be able to study previous findings of other divisions. Government decisions would be based on incomplete information. Offices and divisions of the Bureau would be forced to expend scarce government resources in an inefficient manner to re-discover past findings.

Instead of going down this path, we argued (emphasis added):

"Data collection plays a crucial role in carrying out all of the CFPB’s statutory functions, and the CFPB rightfully relies on data for direction on what steps the CFPB should take to protect consumers and the marketplace. Data is imperative to understand how markets and products are working for consumers, which undoubtedly relates to CFPB’s ability to research, monitor and publish information about markets and consumer products. Similarly, it is essential for the CFPB to collect data on particular issues before it moves forward with rulemaking to understand market trends and identify gaps in consumer protection. Likewise, data guides CFPB’s supervisory process and informs CFPB’s pursuit of enforcement actions too. Limiting CFPB’s access to data within the agency could drastically curtail its effectiveness in protecting consumers and the marketplace, the very purpose for the agency's existence."

Of course, we also used the comment to defend one of the CFPB's crown jewels of industry surveillance and government transparency, the Consumer Complaint Database, which now contains over 1.2 million public complaints:

"Consumer-driven tools, such as the CFPB's online complaint database, use a free market approach to encourage companies to police themselves and lessen the need for government intervention. The visibility of the data included in complaint information gives companies an incentive to treat consumers fairly and correct problems promptly on their own, potentially avoiding regulatory or enforcement activity."

The CFPB's new permanent director, Kathy Kraninger, despite her previous endorsement of all of Mulvaney's decisions, has already rejected his plan to change the bureau's name, as reported in the Washington Post:

"In one of her first acts as the bureau’s new director, Kraninger backed away from the name-change effort. “After being fully briefed on the costs, operational challenges and the effect on stakeholders,” the bureau is halting the name-change effort, she said in the email [to staff]."

For the exact same reasons, "costs, operational challenges and the effect on stakeholders," Director Kraninger should reject the apparent goals of the numerous RFIs filed in 2018, especially those of the Data Collection RFI. In addition, she should certainly reject Mulvaney's unsubstantiated, industry-serving threats to take the public Consumer Complaint Database dark.

For its first six years, the CFPB worked well to accomplish its one mission, protecting consumers; Kraninger has an opportunity to set the Consumer Bureau back on course to clean up a financial marketplace that is still full of tricks and traps for consumers. Data are a key tool for the Consumer Bureau to accomplish that mission. So is the public complaint database.